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SPYD: High Yield Equity Index ETF, 6.11% Dividend Yield, Cheap Valuation

Published Fri, 31 Jul 2020 16:39:14 -0400 on Seeking Alpha

Seeking AlphaETF AnalysisSPYD: High Yield Equity Index ETF, 6.11% Dividend Yield, Cheap ValuationJul. 31, 2020 4:39 PM ET|| About: SPDR Portfolio S&P 500 High Dividend ETF (SPYD)by: Juan de la HozJuan de la Hoz CEF/ETF Income LaboratoryCEF/ETF income and arbitrage strategies, 8%+ portfolio yieldsSummarySPYD invests in high yield S&P 500 stocks.
The fund underweighs tech, and so has underperformed the entire year.
SPYD offers investors a strong 6.11% dividend yield, and could outperform once economic conditions stabilize.
Several stocks and funds, including the SPDR Portfolio S&P 500 High Dividend ETF (SPYD), have seen skyrocketing dividend yields these past few months, as the ongoing coronavirus outbreak pressures the revenues, earnings, and valuations of more traditional companies and industries. These same companies, industries, and funds, including SPYD, present something of a buying opportunity for more contrarian or long-term investors, and could outperform once the outbreak is under control.
SPYD's strong 6.11% dividend yield, high-quality large cap holdings, compelling valuation and price, and reasonably good dividend growth track record combine to create a strong investment fund, and one that should outperform if economic conditions improve, but underperform if these worsen. It's a strong fund, but one whose investment thesis is more reliant on broader economic conditions than most.
Fund Basics
Sponsor: State Street Underlying Index: S&P 500 High Dividend Index Dividend Yield: 6.00% Expense Ratio: 0.07% Total Returns 5Y CAGR: 3.26% Fund Overview
SPYD is an equal-weighted equity index ETF which invests in the 80 S&P 500 stocks with the highest dividend yields. Interested readers can take a closer look at the index's methodology here, but it's a simple methodology, and an even simpler fund.
Three things stand out about SPYD: its strong dividend yield, good dividend growth track record, and diversified holdings. Let's have a... Read more